mrsimba

Residential Property
Some rules you may want to consider

When seeking to purchase property well positioned property should always return good CG over time.
When not buying for CG it should return good constant cash flow. If you think this property will do either or both, I would buy it. If I were worried about either or both, I would walk away. I would then start to look at the other thousands and thousands of property in Aust that will give me confidence in the purchase. Good luck.

Bradshaw.

Bradshaw

Pradeep

I have several units on the Gold Coast, both in Surfers Paradise. I will tell you about the last two deals that I did there in 2001

1. 2 bed 2 bath 1 carpark Peninsula Building beach front full sea/beach view 8th floor new kitchen and paint. Unit was an 8 out of ten in condition. Listed price $250k
Purchase Price $226k
Settlement cost total $235k
Rental then $320 pw x 52 = $16,640 div $226,000 = 8% Gross
Last valuation 2004 now $490K current rent $400 pw = 5% Gross

2. 2 bed 2 bath 1 carpark Monarco St 200 metres to beach wrong side of highway 2nd floor of a three story walk up. 7 out of 10 for condition.
Listed Price $120k

Purchase Price $120k
Settlement cost total $126k
Rental then $220 pw x 52 = $11,440 div $120,000 = 9% Gross.
Last valuation 2004 $250k current rent $270.00 pw = 6% Gross

Now from the gross returns you need to subtract B/C 1. $83 pw 2 $35 pw and other cost associated with holding the property.

In the current market around Surfers anyway you could expect a Gross return of between 3 and 4%
The market is at peak price at this time in my opinion so further growth in the short term would surprise me.

In this area, I personally would not purchase unless I could get at least a 6% Gross return with reasonable outgoings.

You would either have to wait for rents to go higher or prices to drop or put more cash into the deal to give yourself better cash flow. You do the sums.

P.S. It was good buying in 2001 but not so sure now. Maybe we need to wait for the clock to move into a better cycle. Also note that both properties have dropped 3% on investment yields.

Bradshaw.

There are several things that concern me as a property investor when making a purchase to add to my portfolio.

Is the property sound in construction.
Can I afford it.
Is the yield reasonable
Is there good prospect for CG
Why am I buying the property (cash flow or CG or maybe both.)
Have I allowed a buffer if things change

If I am happy with the answers to the above, who cares what the experts have to say. It’s my property, not theirs. I recon if I had listened to the experts over the time I have been investing I would still be living in a rental to scared to do anything.

Bradshaw.

The Saint

The re-valuation of the property when this work is complete IMHO would not increase too much. It will still depend on Land value, recent sales. In relation to improvements on the property in regard to a rental increase, I would try for a minimum of 15% of the cost of the improvement and add that to the weekly rental. I have always been able to obtain this in Australia with my properties.

Bradshaw

bnb

You are at Mt Tamborine what would suit you re a meeting venue. I am available anytime between 29th Oct to 6th Nov 2005. If everyone who is interested in meeting up were to post a few dates and locations we will be able to narrow it down to get the most people there. Maybe we could call our group the Gold Coast Property Investment Interest Group.

Bradshaw.

Shade121

There is some good advise given in the replies to you. At 22 with a little research and experience in the future I am sure you will one day be very wealthy indeed. BUT, remember your youth and approach your investing in a way that will make the trip an enjoyable experience. A comfortable LVR will assist in this enjoyable trip. Do not make this a stressful venture. Remember you have time on your side.Do you know the joke about the old bull and the young bull standing on the hill looking at the cows below. Take the attitude of the old bull.

Bradshaw.

Hi everyone first time posting from Bradshaw.

Just for interest sake. I am always amused with I see that property in the N.T. is still going up. It is true when this is applied in the Darwin market, although the N.T. does have other towns. These town include Tennant Creek which in fact is going backward. Also Alice Springs hit it’s peak around the end of 2004. That market is standing steady but property is now moving much slower. Just for interest sake also, 3 bed ex housing with a basic reno now sells for a 5.58% to 6% return on purchase price.

Bradshaw.